ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, July 15, 2016

Failure to Comply with Internal Investigations Can Be Cause for Termination

At least where the internal investigation concerns actions you took within the scope of your employment that are exposing your employer to possible criminal liability.

This recent case out of the Second Circuit, Gilman v. Marsh & McLennan Cos., Docket No. 15-0603-cv(L), is the latest chapter in a long saga. The plaintiffs were employees of Marsh & McLennan who were executives being investigated for criminal charges by then-New York Attorney General Eliot Spitzer. The employees were eventually indicted and convicted of some of the charges but the convictions were thrown out because of "newly discovered contradictory evidence."

As you might have anticipated, this chain of events led to a number of lawsuits by the accused employees, including this one against former employer Marsh & McLennan, who had terminated the employees after they refused to submit to internal interviews about the allegations in Spitzer's criminal investigation.

The employees had brought claims for abuse of process against Marsh & McLennan but those had been dismissed. The employees were no more successful with their breach of contract claims against Marsh & McLennan. The court found that the employees' employment contracts with Marsh & McLennan were governed by Delaware law, which finds proper cause for termination where the employee refuses a direct and reasonable order by the employer. In this case, the court found that Marsh & McLennan's order that the employees sit for internal interviews to discuss allegations that implicated criminal liability for Marsh & McLennan and regarded the employees' actions during the scope of their employment was a reasonable request. Marsh & McLennan needed to take such measures to protect itself, and, indeed, had a duty to its shareholders to investigate any potential criminal conduct that could have harmed the company. In fact, the court terms Marsh & McLennan's behavior here as "unassailable, even routine." The employees were personally free to refuse to be interviewed, but, in so doing, they provided Marsh & McLennan with proper cause for termination under their employment contracts.

July 15, 2016 in Recent Cases, True Contracts | Permalink | Comments (0)

Thursday, July 14, 2016

Weekly Top Ten SSRN Contracts Downloads (July 14, 2016)

Top-10 Scrolling

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 601 What We Buy When We 'Buy Now'
Aaron Perzanowski and Chris Jay Hoofnagle
Case Western Reserve University School of Law and University of California, Berkeley - School of Information
2 136 Immoral Promises
Enrique Guerra-Pujol
University of Central Florida
3 133 Is Rule of Law an Equilibrium Without Private Ordering?
Gillian K. Hadfield and Barry R. Weingast
USC Law School and Department of Economics and Stanford University, Department of Political Science
4 112 Current Trends in Consumer Junk Debt Buyer Litigation
Peter A. Holland
University of Maryland Francis King Carey School of Law
5 109 On the Surprising Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market
Meirav Furth-Matzkin
Harvard Law School
6 102 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
7 93 Assessment of Damages: Three Specific Problems – The Draft Common European Sales Law in Context
Reinhard Zimmermann
Max Planck Institute for Comparative and International Private Law
8 91 Once Upon a Transaction: Narrative Techniques and Drafting
Susan Chesler and Karen J. Sneddon
Arizona State University (ASU) - Sandra Day O'Connor College of Law and Mercer Law School
9 90 Reining in the Big Promise of Big Data: Transparency, Inequality, and New Regulatory Frontiers
Philipp Hacker and Bilyana Petkova
Humboldt University of Berlin and European University Institute
10 88 Optimal Defaults in Consumer Markets
Oren Bar-Gill and Omri Ben-Shahar
Harvard Law School and University of Chicago Law School

 

SSRN Top Downloads For SSRN Logo (small)
Law & Society: Private Law - Contracts eJournal

1 601 What We Buy When We 'Buy Now'
Aaron Perzanowski and Chris Jay Hoofnagle
Case Western Reserve University School of Law and University of California, Berkeley - School of Information
2 136 Immoral Promises
Enrique Guerra-Pujol
University of Central Florida
3 134 Is Rule of Law an Equilibrium Without Private Ordering?
Gillian K. Hadfield and Barry R. Weingast
USC Law School and Department of Economics and Stanford University, Department of Political Science
4 109 On the Surprising Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market
Meirav Furth-Matzkin
Harvard Law School
5 102 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
6 93 Assessment of Damages: Three Specific Problems – The Draft Common European Sales Law in Context
Reinhard Zimmermann
Max Planck Institute for Comparative and International Private Law
7 93 Equity in LLC Law?
Mohsen Manesh
University of Oregon School of Law
8 91 Once Upon a Transaction: Narrative Techniques and Drafting
Susan Chesler and Karen J. Sneddon
Arizona State University (ASU) - Sandra Day O'Connor College of Law and Mercer Law School
9 87 The Jurisprudence of Paper Clips
Robert A. James
Pillsbury Winthrop Shaw Pittman LLP
10 70 The Legal Writer, Making Offers No One Can Refuse: Effective Contract Drafting — Part 5
Gerald Lebovits
Columbia University - Law School

July 14, 2016 in Recent Scholarship | Permalink | Comments (0)

Wednesday, July 13, 2016

New Book: Damages and Human Rights

I promised our friends at Hart Publishing to post the following notification about a new book by Jason Varuhas: Damages and Human Rights is a major work on awards of damages for violations of human rights that will be of compelling interest to practitioners, judges and academics alike. Damages for breaches of human rights is emerging as an important and practically significant field of law, yet the rules and principles governing such awards and their theoretical foundations remain underexplored, while courts continue to struggle to articulate a coherent law of human rights damages. The book's focus is English law, but it draws heavily on comparative material from a range of common law jurisdictions, as well as the jurisprudence of international courts.
The current law on when damages can be obtained and how they are assessed is set out in detail and analysed comprehensively. The theoretical foundations of human rights damages are examined with a view to enhancing our understanding of the remedy and resolving the currently troubled state of human rights damages jurisprudence. The book argues that in awarding damages in human rights cases the courts should adopt a vindicatory approach, modelled on those rules and principles applied in tort cases when basic rights are violated. Other approaches are considered in detail, including the current 'mirror' approach which ties the domestic approach to damages to the European Court of Human Rights' approach to monetary compensation; an interest-balancing approach where the damages are dependent on a judicial balancing of individual and public interests; and approaches drawn from the law of state liability in EU law and United States constitutional law.
The analysis has important implications for our understanding of fundamental issues including the interrelationship between public law and private law, the theoretical and conceptual foundations of human rights law and the law of torts, the nature and functions of the damages remedy, the connection between rights and remedies, the intersection of domestic and international law, and the impact of damages liability on public funds and public administration. - See more here.

July 13, 2016 in Books | Permalink

Tuesday, July 12, 2016

Johnny Manziel's Rookie Contract - It Pays To Cover Yourself

The Cleveland Browns do not draft players well.  Fortunately for the franchise, they do draft contracts well.  The Browns were able contractually relieve themselves from owing the quarterback the guaranteed money under his rookie deal before cutting him.  According to Pro Football Talk, the team could void the guaranteed money if Johnny Manziel received or did any of the following:

(1) a suspension imposed by the league under any policy;

(2) a suspension imposed by the team;

(3) failure or refusal to report, practice, or play;

(4) leaving the team without prior written consent.

Given Johnny Football's well documented indiscretions and the four game suspension by the NFL, it could be any of the above.  The full article can be found here.

July 12, 2016 | Permalink | Comments (0)

Monday, July 11, 2016

Do Law Profs Breach a Commercial Educational Agreement by Wearing T-Shirts with a Social Message?

A group of 1L students recently caused a stir-up at an anonymous law school by posting an anonymous complaint after their criminal law professor wore a "Black Lives Matter" t-shirt "on campus" (not "to class," apparently).   See the letter and the professor's great response here.  (For full disclosure, our colleagues on the TaxProf Blog also wrote about the story here Images).

Do students, because they enter into a contract with a private law school (or even a public one), have a legitimate reason to complain that their professors wear t-shirts with a socially and legally provocative or at least thought-provoking message?  The students wrote, "We do not spend three years of our lives and tens of thousands of dollars to be subjected to indoctrination or personal opinions of our professors."

Is this reasonable, in your opinion?  First, this comparison is not apt.  In fact, it is an extreme over-exaggeration that barely needs commenting on.  The students also comment that the "BLM" movement does not have anything to do with the law, which demonstrates the sad state of ignorance about the law and society in which many of our students - and perhaps especially those in conservative areas such as Orange County, California - find themselves (that's where the anonymous law school is thought to be located).  The movement is clearly about very little but the law and policy.  Second, students can and should expect to get a quality legal education when attending an ABA-accredited law school, but simply because they pay money for it does not entitle them to only hear about the version of the law that _they_ prefer.  In fact, as the professor so correctly notes in his response, the consumer theory should not apply to the content of one's legal education. In other words, students don't pay to only hear part of the message.  And as the professor said: students certainly don't pay us _not_ to have an opinion about the classes we teach (note that the Tshirt was worn in connection with a criminal procedure class).

What are your thoughts on this?  And why does the law school not publish its name?

July 11, 2016 in Commentary, Contract Profs, Current Affairs, In the News, Law Schools, True Contracts | Permalink | Comments (0)

A Very Good Blog on the Supreme Court of the United Kingdom

I want to recommend an interesting British blog that follows the decisions of the UK Supreme Court including contract law.  It is called the UKSC Blog.

July 11, 2016 | Permalink | Comments (0)

Should English Contract Law Be Persuasive Precedent in American Cases?

International law has been finding its way into American common law as persuasive precedent for some time now.  For example, in the U.S. Supreme Court decision in Lawrence v. Texas, Justice Kennedy cited to the European Court of Human Rights in support of the majority.  But what about looking to recent decisions of British courts, the UK Supreme Court in particular, for persuasive precedent in U.S. law?  The foundations of American contract law are found in the English common law.  

Continue reading

July 11, 2016 | Permalink | Comments (0)

Big Legal Issues Surrounding "The Little Couple"

Little Couple

Source: tvguide.com

The circumstances surrounding this lawsuit, LMNO Cable Group, Inc. v. Discovery Communications LLC, Case No. 2:16-cv-4543 (behind paywall), in the Central District of California, could be a television show in its own right.

LMNO, a producer of a number of reality television shows (most importantly for this case "The Little Couple"), allegedly found itself the victim of embezzlement by its accountant, who then later, according to the complaint, threatened to destroy LMNO's professional relationships unless LMNO kept quiet about the alleged embezzler and gave him $800,000. LMNO apparently refused to comply with this request, instead reporting the alleged embezzler to the authorities.

In the meantime, however, the accountant had evidently been in contact with Discovery Communications, whose station broadcasts "The Little Couple." LMNO alleges in this lawsuit that Discovery used the accountant's help to try to drive LMNO out of business by stealing "The Little Couple" from LMNO.

The alleged stealing of "The Little Couple" involved the alleged breach of a number of contracts between LMNO and Discovery about "The Little Couple." As usual with entertainment contracts, they're complicated, consisting of many amendments, and there's an implied contract angle as well. And, predictably, there are copyright and trademark implications, too.

According to the complaint, Discovery directly employs the actors in "The Little Couple," but the contract has a clause preventing Discovery from using these actors to produce shows without LMNO. Allegedly, that is exactly what Discovery is now attempting to do. Specifically, Discovery and LMNO had discussed making a special episode of "The Little Couple" set in Scotland and England. LMNO alleges that Discovery went ahead and filmed the episode without LMNO's involvement, in violation of an additional implied contract between them with regard to that particular episode. In addition, LMNO is alleging that Discovery's actions have breached the covenant of good faith and fair dealing and interfered with LMNO's abilities to obtain all of its benefits under the contracts.

It will be interesting to see how this all plays out. If you'd like to read more about the case, I found articles here and here.

July 11, 2016 in Current Affairs, Recent Cases, Television, True Contracts | Permalink | Comments (0)

Saturday, July 9, 2016

Arbitration Clauses: Gogo Internet Edition

The rise of Wi-Fi on airplanes means that you never have to be without the internet if you don't want to be...which also means that you never have to be without terms of use! A recent case out of the Eastern District of New York, Salameno v. Gogo Inc., 16-CV-0487 (behind paywall), reinforces that those terms of use are binding on you, and, as could probably be predicted, leads to the enforcement of an arbitration provision contained in them.

In this case, the plaintiffs had purchased Gogo's in-flight Internet access multiple times. They claimed that the Internet access didn't work as advertised, with allegations that it was incredibly slow, crashed frequently, or sometimes didn't work at all. (Anecdotally, I have heard people around me on flights complain about this, although I don't know if Gogo was at issue there or if in-flight Wi-Fi is simply fraught with complications.) Despite these alleged ongoing issues, the plaintiffs kept buying Gogo's Wi-Fi, perhaps in eternal hope that it would someday work properly? At any rate, this all culminated in plaintiffs' lawsuit here.

A judge recently found that the plaintiffs are bound by the arbitration clause in Gogo's Terms of Use. All of the plaintiffs used Gogo's Internet access multiple times, and each time they had to indicate that they agreed to the Terms of Use. This wasn't just a one-time thing, which maybe would have made the court more sympathetic, but multiple times of clicking "Agree" without looking at the Terms of Use. And, the court said, those who seek Internet access in the air are experienced Internet users who should be expected to know how to read the Terms of Use contained in the hyperlink.

How to click on a hyperlink, yes, most Internet users know how to do; whether or not the average Internet user necessarily understands all of the legalese found at that hyperlink is another question entirely, of course, but not one addressed in this case. Possibly because the court assumes that all laypersons understand the difference between litigation and arbitration, although in my experience I am not entirely sure that's true. At any rate, the court here held this arbitration clause to be binding.

July 9, 2016 in Commentary, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (2)

Friday, July 8, 2016

Should I Go to Law School?

While this topic is much discussed on the blogosphere, Professor Mitchell H. Rubinstein over at Adjunct Law Profs Blog has an excellent discussion, which can be found here.  In it he  discusses an article in the New York Times titled "An Expensive Law Degree, and No Place to Use It," which can be found here.

I would add to the discussion that those who wish to pursue a law degree must first be passionate about the law.  Given not only the post-graduate challenges in the legal job market, a legal education is a rigorous discipline.  You have to be ready to turn down 50 yard line Dallas Cowboys tickets on Thanksgiving to study for your Property final (true story).  I have met both students cavalier about entering law school, and those whose dream is to become a lawyer.  I think, whether elite law school or not, the latter will ultimately succeed.  

 

 

July 8, 2016 | Permalink | Comments (0)

Offer in the Form of a Rap Song

I may not be a music critic, but this is noteworthy for contract scholars.  The Pittsburgh Steelers star running back LeVeon Bell presented his initial offer of $15 million per year in contract negotiations.  The interesting part is that it is embedded in a rap song called "Focus."  The full story with a link to the song can be found at Pro Football Talk.

 

 

July 8, 2016 | Permalink | Comments (0)

Thursday, July 7, 2016

Weekly Top Ten SSRN Contracts Downloads (July 7, 2016)

TopTen Stamp-808x455

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 593 What We Buy When We 'Buy Now'
Aaron Perzanowski and Chris Jay Hoofnagle
Case Western Reserve University School of Law and University of California, Berkeley - School of Information
2 130 Immoral Promises
Enrique Guerra-Pujol
University of Central Florida
3 129 Is Rule of Law an Equilibrium Without Private Ordering?
Gillian K. Hadfield and Barry R. Weingast
USC Law School and Department of Economics and Stanford University, Department of Political Science
4 109 Current Trends in Consumer Junk Debt Buyer Litigation
Peter A. Holland
University of Maryland Francis King Carey School of Law
5 91 Assessment of Damages: Three Specific Problems – The Draft Common European Sales Law in Context
Reinhard Zimmermann
Max Planck Institute for Comparative and International Private Law
6 89 Once Upon a Transaction: Narrative Techniques and Drafting
Susan Chesler and Karen J. Sneddon
Arizona State University (ASU) - Sandra Day O'Connor College of Law and Mercer Law School
7 87 Reining in the Big Promise of Big Data: Transparency, Inequality, and New Regulatory Frontiers
Philipp Hacker and Bilyana Petkova
Humboldt University of Berlin and European University Institute
8 86 Optimal Defaults in Consumer Markets
Oren Bar-Gill and Omri Ben-Shahar
Harvard Law School and University of Chicago Law School
9 85 Nudging and Autonomy. A Philosophical and Legal Appraisal
Philipp Hacker
Humboldt University of Berlin
10 82 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College

 

SSRN Top Downloads For SSRN Logo (small)
Law & Society: Private Law - Contracts eJournal

Rank Downloads Paper Title
1 593 What We Buy When We 'Buy Now'
Aaron Perzanowski and Chris Jay Hoofnagle
Case Western Reserve University School of Law and University of California, Berkeley - School of Information
2 130 Immoral Promises
Enrique Guerra-Pujol
University of Central Florida
3 129 Is Rule of Law an Equilibrium Without Private Ordering?
Gillian K. Hadfield and Barry R. Weingast
USC Law School and Department of Economics and Stanford University, Department of Political Science
4 91 Assessment of Damages: Three Specific Problems – The Draft Common European Sales Law in Context
Reinhard Zimmermann
Max Planck Institute for Comparative and International Private Law
5 91 Equity in LLC Law?
Mohsen Manesh
University of Oregon School of Law
6 89 Once Upon a Transaction: Narrative Techniques and Drafting
Susan Chesler and Karen J. Sneddon
Arizona State University (ASU) - Sandra Day O'Connor College of Law and Mercer Law School
7 82 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
8 76 The Jurisprudence of Paper Clips
Robert A. James
Pillsbury Winthrop Shaw Pittman LLP
9 74 On the Surprising Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market
Meirav Furth-Matzkin
Harvard Law School
10 68 The Contract Clause during the Civil War and Reconstruction
James W. Ely
Vanderbilt University - Law School

July 7, 2016 in Recent Scholarship | Permalink | Comments (0)

Wednesday, July 6, 2016

Cheating the Cheaters

Yesterday, I blogged here about ticketscalping “ticketbots” outperforming people trying to buy tickets with the result of vastly increased ticket prices.

Now Ashley Madison – dating website for married people – has announced that some of the “women” featured on its website were actually “fembots;” virtual computer programs. In other words, men who paid to use the website in the hope of talking to real women were actually spending cash to communicate with computers (men have to pay to use the website, women don’t). Images-1

Why the announcement? The new leadership apparently wanted to air the company’s dirty laundry, so to speak.

Ashley Madison was hacked last year, revealing who was using the website to cheat on their husband, wife or partner. It was a devastating hack, ruining lives and even leading a pastor to commit suicide.

This seems to be a clear breach of contract: if you pay to communicate with real women, the contract must be considered breached if all or most of the contact attempts went to and/or from computers only. Perhaps even worse for Ashley Madison is the fact that the company is under investigation by the U.S. Federal Trade Commission. The FTC does not comment on ongoing cases, but “it could be investigating whether Ashley Madison properly attempted to protect the identity of its discreet customers -- which it promised to keep secret. Or it could be investigating Ashley Madison for duping customers into paying to talk to fake women. On Monday, the company also acknowledged that it hired a team of independent forensic accounting investigators to review past business practices around bots and the ratio of male and female U.S. members who were active on the site." Images

July 6, 2016 in Commentary, Current Affairs, E-commerce, Famous Cases, In the News, Miscellaneous, Web/Tech | Permalink | Comments (0)

Tuesday, July 5, 2016

Ticket Scalping Machines – An Intersection between Contracts and Criminal Law

Have you ever tried buying concert tickets right when they were made available for sale on the Internet, only to find out mere minutes later that they were all sold out? Or, for that matter, highly coveted camping reservations in national or some state parks?

Where once, we all competed against the speed of each other’s fingertips and internet connections, nowadays, “ticket bots” quickly snatch up tickets and reservations making it virtually impossible for human beings to compete online. Ticket bots are, you guessed it, automatic computer programs that buy tickets at lighting speed. They can even read “Captcha boxes;” those little squiggly letters that you have to retype to prove that you are not a computer. Yah, that didn’t work too well for very long.

“A single ticket bot scooped up 520 seats to a Beyonce concert in Brooklyn in three minutes. Another snagged up to more than 1,000 U2 tickets to one show in a single minute, soon after the Irish band announced its 2015 world tour.”

Ticket bots scoop up tickets for scalpers who then resell them on other websites, marking the tickets up many times the original price. (I’m actually not saying that state and national parks are cheated that way, maybe camping reservations in those locations are just incredibly popular as hotel prices have increased and incomes are staggering. I personally used to be able to, with t Imageshe help of a husband and several computers, make campground reservations for national holidays, but those days are long gone…”we are now full.”).

Ticket bots are already illegal in more than a dozen states. New York is considering cracking down on this system as well. However, the most severe penalty under New York law is currently fines in the order of a few thousand dollars where ticket scalpers make millions of dollars. A new law proposes jail time for offenders. This is thought to better deter this type of white-collar crime in the ticket contract market.

July 5, 2016 in Commentary, Current Affairs, E-commerce, In the News, Legislation, Web/Tech | Permalink | Comments (0)

Donald Trump and the Covenant of Good Faith and Fair Dealing

Everyone else is talking about Donald Trump, so I guess why shouldn't we hop in, right?

This recent New Yorker Talk of the Town piece introduced me to an ongoing contract dispute involving Trump that I hadn't been paying attention to, even though now I see it's been widely reported by various news outlets, including food blogs, because it involves restaurants. So if you don't normally like to read political stuff but you consider yourself a foodie, this blog entry is also for you!

It turns out that Trump is embroiled in breach of contract lawsuits with a couple of famous chefs who pulled out of commitments to put restaurants into one of Trump's new developments. According to the reports, the impetus for pulling out of the business deal was Trump's anti-immigrant rhetoric during his presidential campaign. Jose Andres, himself an immigrant, was not too happy about Trump's statements. As seems to be the case with Trump, his business concerns don't necessarily track his political rhetoric when the bottom line is at issue. Faced with an immigrant refusing him rather than the other way around, Trump sued Andres for breach of contract. Andres counter-sued, alleging that Trump's many derogatory remarks about Hispanics rendered Andres's proposed Spanish restaurant "extraordinarily risky."

The chefs sought partial summary judgment, which a court recently denied, finding that material facts were still in dispute.

The crux of this lawsuit revolves around the covenant of good faith and fair dealing: Did Trump breach that covenant when he made his remarks, which would make him the one in breach of contract? Or were Trump's remarks not a breach of the covenant, either because they're not relevant to the contract or because they did not harm the prospects for success of Andres's restaurant? I don't know if the parties will continue to litigate this question but I'm curious what the result would be. In the current climate where rhetoric is frequently extremely inflammatory, could there be contract implications to such statements? How far, policy-wise, do we want the covenant of good faith and fair dealing to extend?

The case is Trump Old Post Office LLC v. Topo Atrio LLC, 2015 CA 006624 B (behind paywall), in District of Columbia Superior Court. 

July 5, 2016 in Celebrity Contracts, Commentary, Current Affairs, Food and Drink, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Scholarship Spotlight: An Empirical Study of Unenforceable Contract Terms (Meirav Furth-Matzkin - Harvard)

While the enforceability of many contract terms discussed in this space can be a matter of good faith dispute, other terms are clearly beyond the pale of enforcement. What is the impact of potentially in terrorem use of invalid contract clauses on the general non-lawyer population? Meirav Furth-Mazkin (Harvard S.J.D. Program, John M. Olin Fellow) has conducted a fascinating empirical study on point entitled On the Surprising Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market. Here is her abstract:

Meirav Furth-MatzkinThis paper explores the prevalence of unenforceable terms in consumer contracts. Taking the residential rental market in the Greater Boston Area as a test case, the study analyzes a sample of 70 leases in terms of Massachusetts Landlord and Tenant Law. The paper’s findings reveal that landlords frequently use legally dubious — as well as clearly invalid — provisions in their contracts. Building on psychological insights and on a survey-based study of 279 tenants, the paper suggests that such clauses may significantly affect tenants’ decisions and behavior. In particular, when a problem or a dispute with the landlord arises, tenants are likely to perceive the terms in the lease contract as enforceable and forgo valid legal rights and claims. In light of this evidence, the paper discusses preliminary policy prescriptions.

The article's introduction further describes the study and its findings:

Residential LeaseThe study draws a distinction between clauses that are unenforceable and clauses that are enforceable but misleading. While not unenforceable per se, misleading clauses are nonetheless as likely to misinform tenants about their mandatory rights and remedies by misrepresenting the legal state of affairs. Additionally, the paper reports not only the inclusion of provisions that misrepresent the legal state of affairs, but also the exclusion of some of the tenant’s rights and remedies from the lease altogether.

The study’s findings demonstrate that residential leases not only frequently omit various rights and remedies that the law bestows upon tenants, but also include unenforceable clauses that conflict with the law and misleading clauses that misrepresent it. As shown below, 99% of the leases in the sample (69 out of 70) include at least one unenforceable or misleading clause. Such clauses shift responsibilities and liabilities from landlords to tenants, restrict or abolish tenants’ mandatory rights and remedies, and so on. When tenants’ rights and remedies are finally mentioned in these contracts, they are often inaccurately described to the detriment of tenants.

These findings may suggest that landlords are not sufficiently deterred from using unenforceable and misleading clauses in their leases. Such clauses might be included either intentionally—to exert profit— or by mistake, out of landlords’ ignorance of the law or their expectation that it will change. Even if landlords do not knowingly insert UMCs into their contracts, if the costs of including unenforceable terms are low, landlords may have little incentive to ensure that their contracts comply with the mandatory regulation governing them.

On the Surprising Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market is available for download from SSRN here.

July 5, 2016 in Recent Scholarship | Permalink | Comments (1)

Monday, July 4, 2016

Article 50: The Exit from Brexit . . . but is anyone willing to take the off ramp?

On June 23, 2016, by a slim margin, the United Kingdom voted by referendum (popularly referred to as "Brexit") to leave the European Union 52 to 48 percent.  Since the result, the exchange rate for the British pound sterling has fallen to a 30-year low at $1.33.  Professor Michael Dougan criticized the campaign to leave the EU as irresponsible.   And 30,000 anti-Brexit protesters took to the streets of London.  However, the FTSE, which dropped initially after the vote, has since rebounded.

It is time to tap the brakes a little.  The UK has not yet left the EU.  In fact, it may never.  The Brexit vote is non-binding.  

Continue reading

July 4, 2016 | Permalink | Comments (0)

Emory Announces Tina L. Stark Award for Excellence in Transactional Teaching

As a many-years user of Drafting Contracts: How and Why Lawyers Do What They Do, I was pleased to see the following press release from Emory University Law School.

Tina StarkEmory University Law School is proud to announce the creation of the Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills. The award will be presented at Emory’s sixth biennial conference on the teaching of transactional law and skills in June of 2018.

Tina L. Stark, the founding director of Emory Law’s Center for Transactional Law and Practice and the author of the groundbreaking textbook “Drafting Contracts:  How and Why Lawyers Do What They Do,” has worked tirelessly to assure that law students have the opportunity to graduate as practice-ready transactional attorneys. Through her enthusiasm and perseverance, and with considerable grace and vision, she has nurtured the efforts of transactional law and skills educators the world over.

In honor of Tina’s considerable achievements, and in further recognition of her continued service as a beloved teacher and a cherished mentor, the Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills will be awarded to an educator who is:

  • committed to training students to be practice-ready transactional attorneys Drafting Contracts by Stark
  • dedicated to engaging, inspiring, motivating and nurturing students
  • devoted to teaching with passion, using creative and innovative methods
  • known for achievement in curriculum or program development and pedagogy
  • pledged to advance the cause of transactional law and skills education

Nominations for the 2018 Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills will be accepted beginning in June of 2017. Please see the Center for Transactional Law and Practice website for further details about the nomination and selection process in 2017 when the nomination window opens.

If you have any questions about the award, please contact Sue Payne at sue.payne@emory.edu.

H/T:  D.C. Toedt, On Contracts

July 4, 2016 in Books, Contract Profs, Law Schools | Permalink | Comments (0)

Greetings and Salutations

I want to thank Professor Dellenger for allowing me to join the Contract Law Profs community.  I also wish to say salutations.  One of my favorite books is Charlotte's Web.  When Charlotte greets Wilbur for the first time, she says "salutations" explaining that "[s]alutations are greetings; it's my fancy way of saying hello."  So this is my fancy way of introducing myself.

As Professor Dellenger mentioned in her post, I am an Administrative Judge at the Federal Aviation Administration with a focus on government contract law and alternative dispute resolution.  I am a member of the American Law Institute, and, among other projects, am a member of the Members Consultive Group on the Restatement (Fourth) of Contracts: Consumer Contracts. In essence, I love contract law.  

I have an academic perspective on the law.  I enjoy writing law review articles, and you can find my woefully out of date SSRN page here.  I've been on the AALS market previously, but ended up choosing my current position.   I am not new to law blogging having been a guest over at PrawfsBlawg last December.

Among other topics, I plan to take a comparative approach and blog about some recent decisions in contract law by the UK Supreme Court.  I also will weigh in on the Brexit vote and its aftermath from the perspective of the Lisbon Treaty.

 

July 4, 2016 | Permalink | Comments (0)

Sunday, July 3, 2016

Welcome to New Blogger, Administrative Judge Maravilla

I am proud to announce that Judge Maravilla of the Office of Dispute Resolution of the FAA will be joining our team of bloggers.  Judge Maravilla will introduce himself, but for now, here is a link to his biography.

 

Welcome!

July 3, 2016 in Contract Profs | Permalink